The EU agrees on stricter rules to combat money laundering

The EU Council and the European Parliament have reached a preliminary agreement on part of a package of anti-money laundering measures aimed at protecting EU citizens and the financial system from money laundering and terrorist financing.

The press service of the EU Council reported.

This agreement is part and parcel of the EU’s new anti-money laundering system. It will improve the way national systems against money laundering and terrorist financing are organised and work together. This will ensure that fraudsters, organised crime and terrorists will have no space left for legitimising their proceeds through the financial system.

Vincent Van Peteghem, Minister of Finance of Belgium, which holds the presidency of the EU Council

Key measure of EU’s new legislation against money laundering

• According to the deal, CASPs will need to apply customer due diligence measures when processing transactions amounting to €1000 or more. It requires more actions to mitigate risks related to transactions with self-hosted wallets.
• An EU-wide top limit of €10 000 is set for cash payments, which will make it harder for criminals to launder dirty money. The EU member nations will have the flexibility to impose a decrease maximum limit.
• This agreement makes the rules on beneficial ownership more transparent. Beneficial ownership refers to people who actually control or enjoy the benefits of ownership of a legal entity, although the title or property is in another name.
• Obliged entities will be required to apply increased due diligence measures to occasional transactions and commercial relationships involving high-risk third countries whose shortcomings in their national anti-money laundering and counter-terrorism regimes make them represent a threat to the integrity of the EU’s internal market.

The new package will transfer all rules applicable to the private sector to the new regulation, while the directive will address the organization of institutional AML/CFT systems at the national level in EU member states.

The preliminary agreement on the AML/CFT regulation will for the first time comprehensively harmonize the rules across the EU, closing possible loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.

The agreement on the directive will improve the organization of national anti-money laundering systems.

The Committee of Permanent Representatives and the European Parliament will now finalize and present the proposed measures to the representatives of the member states for approval. The EU Council and the EP will need to formally approve the texts before they can be published in the EU’s Official Journal and come into force.

In October, the International Group on Action against Money Laundering (FATF), following a three-day meeting in Singapore, decided to add Bulgaria, an EU member state, to the so-called gray list of countries requiring enhanced monitoring.

The international financial regulator subjected Bulgaria, the second EU member, to enhanced monitoring. In June 2023, the international financial regulator also added Croatia to the list.